Verizon Wireless Announces the Launch of a CDMA-only iPhone 4

| Jan 11, 2011 | Consumer Services - U.S.
| Analyst: Deepa Karthikeyan

Event Summary

January 11, 2011 – Verizon Wireless officially announced that it will offer the Apple iPhone 4. The device will be CDMA-only and has features similar to the GSM iPhone 4 version. Verizon Wireless will pre-install a 3G mobile hotspot that will offer WiFi capability for up to five devices. Existing customers will be able to pre-order the iPhone starting February 3, 2011. It will then be available to general public on February 10, 2011 for $199.99 for the 16GB version and $299.99 for 32GB, with two-year contract.

Quick Take

Analytical Summary

• Current Perspective: Very positive on Verizon Wireless’ alliance with Apple to bring the first CDMA-enabled Apple product - the iPhone 4 to its users as the iconic device will further strengthen its lead in the wireless space. The launch marks the end of AT&T’s exclusive reign over the iPhone offering Apple consumers (disgruntled or not) more choice in the selection of a service provider. While data plans for the device have yet to be announced, Verizon Wireless has indicated that users can subscribe to its existing Nationwide plans, which are priced similar to AT&T’s offerings . With this launch, the carrier has gained long-term marketing muscle to drive net additions and reduce churn, potentially at the expense of other carriers and up-sell existing subscribers to higher-priced data and family plans.

• Vendor Importance: Very high to Verizon Wireless as the carrier has not only managed to strike an alliance with a coveted player in the devices segment, but has also negated a critical advantage that competitor AT&T Wireless has enjoyed (i.e., exclusive services provider for Apple products) for the past four years. As long as Verizon Wireless maintains competitive plan pricing, it will see an uptick to its subscriber and revenue figures in the upcoming quarters. The only question will be increased costs on Verizon’s end if it spends more on device subsidies for the iPhone.

• Market Impact: High on the wireless services segment, because after months of anticipation, a CDMA-based Verizon Wireless iPhone has finally surfaced with a non-exclusivity deal bringing the critical element of competition to the picture. The non-exclusivity factor could potentially mean that the device will soon be offered by rivals T-Mobile and Sprint, which will really boost Apple’s device sales as well as help it counter the exponential growth of Android. It will also enable carriers to once again compete on a more level playing field, negating the advantage (or disadvantage where network strain is concerned) that a game changer like the iPhone can provide.

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